NEWS REVIEW
No time to celebrate
Wakefield-based Card
done with rival chain
Factory has snapped
operator, Card
Factory.
up 76 of the failed As GT reported
Celebrations Group’s
last month, Zolfo,
moved into a period
stores. But as Lewis
of exclusivity with
Eckett discovers, not
a preferred bidder,
all in the industry are
which everyone
suspected was
cheering.
Dean Hoyle’s
Wakefield-based
Dave Wesson:
Greetings Today has been having a bit
Card Factory. But
Little to celebrate about.
of a problem getting a photo of David
the two-week period
Wesson.
was extended as
“Everything I’ve got shows me smiling,” says the former commercial
the papers remained
director of the failed Celebrations chain, “And that really isn’t how I feel right
unsigned, prompting
now.”
speculation that
You can’t blame him for being camera shy. Since Celebrations went
Hoyles was carrying
into administration Wesson has been on the outside looking in having left
out further analysis
Win/win situation for Card Factory’s Dean and Janet
the business after it went into administration – a move prompted by the
to see which bits of
Hoyle
unexpected refusal of the bank to sanction a request for interim financing.
Celebrations would
‘The business was trading flat,” Wesson says. “Which in this market is
best fit into his existing business.
The answer came when Zolfo finally announced that it had sold a mere 76
of the 288 Celebrations stores to Card Factory for an undisclosed sum with
“The administrators had started
the remainder of the estate being traded over Christmas while further options
were explored. The news release claimed that the deal ‘was the best possible
to trash the business. Buyers
outcome for the creditors’, or in other words the Group’s bankers rather than
unsecured creditors like publishers and suppliers.
were made redundant and
Card Factory in turn announced that it had put together a ‘rescue’
package and saved 500 jobs and the creation of up to 400 new positions.
there was no stock in the
Staff at the remaining Celebrations stores have said they are being made
redundant on 10th January.
pipe.” Wesson
Why Zolfo decided to hive off a third of the stores in favour of a complete
sale of the business is unclear. Although the news that Celebrations’ bankers,
Lloyds TSB is also a backer of Card Factory would suggest there were good
lines of communication between the dealmakers involved
reasonable but the problem was that our 2007 financing arrangements were
Nevertheless, Wesson was convinced that the longer negotiations went on
built around sale growth so as soon as sales slowed the business became
the harder it was going to be for a full business going concern sale.
cash-strapped.”
“In the inevitable wind down of operations, it was becoming difficult for a
Wesson has broken cover recently to talk about events leading up the
potential buyer to support the ongoing short term future of the business as it
collapse and what he has been up to since.
was,” says Wesson. “Key functions like buying were being made redundant
“When the business was put into administration I stepped away to work on
and there was no spring 2009 stock in the pipe, which is a killer. Whatever
securing a bid with outside investors.”
happens after Christmas the remaining business will struggle to get supplied
The timeline is critical here, with some in the industry questioning why
with stock immediately as it takes time to re-ignite relationships with suppliers,
Wesson didn’t work to secure backers for the business before the bank pulled
which is why we wanted to take on the business as quickly as possible.
the plug.
“Suppliers were key to securing the business going forward and they need
“I did do this but it all happened very quickly,” states Wesson. “And the
to be kept onboard.”
bank’s decision was a surprise because it was a fairly normal request to
One publisher, who declined to be named, said it would have preferred a
see us through a short term funding requirement in the run up to christmas.
deal for the business as a whole, even if it had ‘management’ backing.
“But they weren’t budging so in the space of a week I had a number of
“We would have got back 50% of the debt and we would still be trading
conversations with the bank were had and we started talking to potential
with 288 stores,” said the source. “As it is we are stuck with the stock, stuck
backers to mount a private bid for the whole business. My drive in all this was
with the debt and stuck with the prospect of less stores to trade with.”
to try and safeguard jobs and suppliers’ contracts and move the business
The view chimes with Wesson’s own belief that Card Factory had been
forward.”
allowed to cherry pick the best 76 stores, making it almost impossible for
Wesson’s team did mount a bid for whole Celebrations Group, contingent
anyone to take the rest.
on taking control by the end of November 2008. In the end Wesson was
“It’s a fantastic coup for Card Factory,” says Wesson. “A double win for
informed by the administrator, Zolfo (formerly Kroll), that a deal had been
them.”
16 Greetings Today
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